Why does CATL invest in car companies? The trend of upstream and downstream integration of the new energy vehicle industry chain is strengthening

event:

(1) According to media reports such as 36Kr, in April 2018, CATL and new car company BYTON signed a letter of intent for strategic cooperation, and the two parties will carry out in-depth cooperation in the field of automotive battery technology; in June 2018, CATL participated in BYTON's Series B financing.

(2) According to Gasgoo and other reports, in February 2017, CATL invested EUR 30 million in Finland’s Valmet Automotive Oy, acquiring a 22% stake in the company. Both parties expressed their willingness to work together on technical cooperation in the field of electric vehicles.

Byton: A new type of car company integrating Chinese and foreign technologies

BYTON was founded in 2016 and is headquartered in Nanjing. The two co-founders, Carsten Breitfeld and Daniel Kirchert, came from BMW and Infiniti respectively, and other core members came from Tesla, Google, Changan and other companies. BYTON has released two concept cars, of which the K-Byte is scheduled for mass production in 2021 (range 400/520km), and the M-Byte is scheduled for mass production in 2019. In June 2018, BYTON announced the completion of a $500 million Series B financing round, with investors including FAW, CATL, TusHoldings and others.

Valmet Automotive: European mid- to high-end car manufacturer

Valmet Automotive is one of the world's largest automakers, focusing on automotive technology and manufacturing, convertible roof systems and technical consulting in the fields of mid-to-high-end cars, convertible cars and electric cars. It has locations in Finland, Germany and Poland, and is currently working on further expansion in the electric car market. Valmet's customers include Mercedes-Benz, Porsche, Ford and others. In 2017, CATL invested 30 million euros to acquire 22% of Valmet's shares. Currently, Pontos/Tesi/CATL hold 39%/39%/22% of the shares respectively.

After investing in OEMs, CATL has benefited comprehensively in terms of technology, customers, and orders.

CATL is a leading power battery company. We believe that the purpose of its investment in Byton and Valmet is: (1) Power batteries are the core of new energy vehicles, but the overall performance of electric vehicles is also affected by components such as batteries, motors, electronic controls and automotive electronics. CATL's investment in car companies will provide it with more abundant R&D data and more underlying technical support; (2) After investing in downstream OEMs, CATL's relationship with the two vehicle manufacturers has broken through the traditional supplier-customer system, the battery testing cycle is expected to be shortened, and CATL's power battery technology iteration is expected to accelerate; (3) Valmet has manufacturing experience and customer resources for mid-to-high-end European and American models, which is conducive to the expansion of CATL's power battery business in the European and American markets, while Byton has an excellent team background and will be able to contribute more power battery orders to CATL after the mass production of its models.

The traditional supplier-customer system is broken, and the upstream and downstream integration trend is entering a new stage

With the trend of automobile electrification, the traditional supplier-customer system is being broken. In the past few years, in order to lock in production capacity and control costs, downstream companies have frequently invested in upstream suppliers; Guoxuan High-tech's investment in BAIC New Energy and CATL's investment in Byton and Valmet indicate that the integration trend of upstream and downstream of the industrial chain is moving towards a new stage.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.